PDD Holdings Inc. (PDD) Q2 2026 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to PDD Holdings, Inc. Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today. Sir, please go ahead.

Thank you, operator, and hello, everyone, and thank you for joining us today. PDD Holdings' earnings release was distributed earlier and is available on our website at investor.pddholdings.com as well as through the GlobeNewswire services. Before we begin, I'd like to refer you to our safe harbor statement in the earnings press release, which applies to this call as we'll make certain forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to GAAP measures. Joining us today on the call are Mr. Chen Lei, our Co-Chairman and Co-Chief Executive Officer; Mr. Zhao Jiazhen, our Co-Chairman and Co-Chief Executive Officer; as well as Mr. Liu Jun, our Financial Director. Lei and Zhao Jiazhen will make some general remarks on our performance for the past quarter and our strategic focus. Jun will then walk us through our financial results for the second quarter ended June 30, 2026. On today's call, certain management remarks will be in Chinese and we will help translate. Please kindly note that English translation is for reference only. And in case of any discrepancy, statements in the original language should prevail. Now it's my pleasure to introduce our Co-Chairman and Co-Chief Executive Officer, Mr. Zhao Jiazhen. Zhao Jiazhen, please go ahead.

[Interpreted] Hello, everyone. This is Zhao Jiazhen, and thank you for joining our earnings call for the second quarter of 2026. Before we formally begin, we would like to take this opportunity to express our deepest condolences on the passing of our Independent Director, Professor Ivonne Rietjens, and to pay our highest tribute to her significant contributions and dedicated service during her tenure with us. Professor Rietjens served a long tenure as Chair of the Toxicology Department at Wageningen University & Research in the Netherlands and earned an international reputation in the field of food research and drug effects. Since joining the company as an Independent Director in August 2023, Professor Rietjens provided invaluable professional advice on the Company's governance and development. At the same time, as a long-standing partner of our smart agriculture competition, Wageningen University & Research has consistently brought international perspectives and expert guidance to the event, helping it become an important global platform for innovation in agricultural technology as well as for talent development. We will carry forward the passion for agricultural research and continue to increase our investment in agriculture and agricultural research. And through these long-term commitments, honor the professional legacy and make greater contributions to agricultural and food safety research worldwide. And now let us return to the results for the quarter. The second quarter this year marked a new phase, a new decade of high-quality development as we moved from initial rollout to deeper execution. Our CNY 100 billion support program has entered a phase in which our sustained investment is beginning to yield tangible results. The positive effects across our platform and industry are being unlocked at a faster pace with improvements in both the quality and efficiency across the supply and demand sides. At the same time, we continue to make steady progress on our strategic goal of building another PDD over the next 3 years. Although the initial rollout of our first-party brand model over the past 6 months was slower than expected due to certain external factors, the overall momentum remains positive. The operations are now fully underway and progressing smoothly. We will commit fully to transforming the supply chain for higher-quality growth, drive the upgrading of traditional industries, and continue to unlock the supply chain's new growth potential from within. Furthermore, to accelerate supply chain transformation and upgrade, we have established a dedicated company in the Xiong'an New Area and purchased an office building there to focus on new opportunities created by intelligent technologies. And to support upgrading and high-quality development of traditional manufacturing, we have also established a data processing service center for traditional industries and an integrated service center to help traditional manufacturers move up the value chain and pursue high-quality development. We delivered solid results for the quarter. Group revenue was RMB 112.4 billion, representing a year-over-year increase of 8%, while group net income was RMB 27.2 billion, declining 12% year-over-year. This mainly reflected our continued investments in our platform and a broader industry ecosystem, which partly weighed on our performance this quarter. In the first half of this year, competition in the e-commerce industry remained intense. A complex and rapidly evolving market environment placed greater demand on both platform governance and industry development, presenting us with new challenges. We continue to step up investment in our platform and industry ecosystems through a coordinated set of measures focused on governance, fee reductions, and merchant support with the goal of building a platform ecosystem that creates value for all participants. We have significantly increased our R&D spending on platform governance. In addition to upgrading our technology-enabled risk prevention and control systems, we significantly expanded our specialist trust and safety teams and strengthened our oversight across all product categories. By taking into account specific characteristics of the different categories and launching targeted governance initiatives, we made ecosystem governance more regular, granular, and rules-based. To date, the platform has introduced more than 150 comprehensive trust and safety measures. In June alone, we launched over 50 targeted initiatives addressing key areas such as product listing controls, food and drug safety, qualification reviews, advertising compliance, intellectual property protection, misleading marketing, live stream e-commerce standards, and prevention of technology misuse. We are dedicated to upholding high compliance standards through rigorous rules, taking a systematic approach to reshaping our governance framework and fostering a safer, better regulated, and more trustworthy shopping environment. For food safety, we launched a dedicated governance initiative that prohibits the sale of freshly prepared food and beverage products. We further tightened merchant qualification reviews as well as information disclosure requirements to prevent and mitigate food safety risks early on. At the same time, the platform introduced more detailed requirements governing the permitted scope of food products sold via live streaming, live streamer conduct, and how products are described and presented. From product estimation to live stream presentation, we guide merchants throughout the food process to operate with integrity and present products truthfully so that consumers can purchase and consume their food products with peace of mind. In early June, we also produced and released a number of video courses addressing common challenges and pain points in platform governance. These courses encourage merchants to familiarize themselves with the rules relevant to the industry, avoid violations, and protect their legitimate rights and interests in accordance with platform rules. Namely, the course frequently asked questions about store business licenses received 340,000 views within 24 hours of launch. Building on the systematic upgrade of our platform governance, we have continued to step up investment in the CNY 100 billion support program. Our support now extends beyond our broad merchant base to upstream and downstream participants across agricultural production regions and industrial clusters, helping drive comprehensive upgrades throughout the supply chain. In agricultural production regions, the 2026 Pinduoduo Premium product initiative has reached dozens of specialty agriculture regions, including those for Jiangsu aquatic products, Chongqing plums, Shaanxi Chinese toon sprouts , Hainan pineapple, Hainan lychee, Hunan preserved duck, and Hubei crayfish. Through the initiative, we help these regions develop new products, raise cultivation standards, and improve cold chain logistics, thereby unlocking greater value for their agricultural products. Take the Hainan pineapple growing region as an example. In recent years, local merchants have begun introducing a new variety known as the Golden Diamond pineapple. Unlike traditional varieties, it has a distinct sweetness and requires neither removing the eyes nor soaking in salt water before serving. Supported by high-traffic programs on our platform, including flash sale and 10,000-people group buy, the variety quickly gained market traction and became one of the season's most popular foods. The greater certainty provided by e-commerce orders has also given growers the confidence to expand production. To date, the local cultivation area for Golden Diamond pineapples has grown from scattered trial plots to more than 100,000 mu. Across the industrial belts, our dedicated new quality supply team has visited manufacturers across different regions and sectors, including home textile in Suzhou, tent manufacturers in Shaoxing, outdoor products in Jinhua, cosmetics in Guangzhou, menswear in Xi'an, and textile in Xinjiang. We provide a suite of support measures to these merchants such as traffic support, data enablement, expansion of market reach, cost reduction, smart manufacturing, and warehousing upgrades. As a result, manufacturers have cut their production cycles by half and have substantially improved their fulfillment capabilities. They can now rapidly handle large order volumes on our platform while tailoring to consumers' customization needs. This has enabled manufacturers to take a transformative leap from traditional manufacturing to building brands of their own, while accelerating the shift from traditional to new growth drivers across this industrial belt. Xinjiang's textile industry is a good example. [ Huocheng ] county in Xinjiang was one of the major sources of migrant labor with more than 200,000 local residents previously working in the textile industry in Jiangsu and Zhejiang provinces alone. In recent years, younger generation from the county have begun establishing factories locally and selling textile products nationwide through Pinduoduo. Their annual sales have grown by an average of 4 to 5x and have built leading brands in niche categories such as mosquito nets that are exported to Southeast Asia and Europe during the summer season. Today, the local economy has moved beyond its traditional reliance on labor migration and has established an integrated path to industrial development that brings together capital, technology, talent, and sales channels. In addition, our free shipping to villages program has continued to deliver positive results since its launch 6 months ago. We have now established last-mile delivery networks across more than 10 provinces and municipalities nationwide, including country-level transit hubs and village pickup points. These networks have brought significant job creation to counties and rural communities while accelerating the distribution of consumer goods, home appliances, agriculture supplies, and farming equipment to rural markets. In doing so, we are helping merchants unlock new growth opportunities and enabling consumers in remote villages to improve quality of life. Take Shandong as an example. As one of China's leading agricultural provinces, it is a key region for Pinduoduo's free shipping to villages program, and earlier pilots in [ Heze Juancheng and Linyi Yishui ] have already produced significant results with order volumes in the villages increasing several fold. And Qingzhou, meanwhile, is a major domestic production hub for water-soluble and innovative fertilizers, and many local agriculture supply companies are building on this momentum to reach more villages across the country. As a platform serving the public, we have always sought to fulfill our social responsibilities and give back to the society. Recently, typhoons and heavy rainfall caused severe flooding in several parts of Guangxi. To support frontline disaster relief efforts, Pinduoduo made a donation of RMB 10 million to the affected areas. The funds were used to procure relief supplies and equipment, provide assistance and temporary shelter to affected residents, and support post-disaster recovery and reconstruction. As we embark on our next decade, we are more convinced than ever that high-quality development calls for both the intensity of the sprint and, more importantly, the perseverance of a marathon. We will stay committed to taking a long-term approach and execute our new decade of high-quality development strategy with patience and results to deliver solid and tangible progress at every step. We will continue to invest resolutely in our supply chain, empower merchants and industries, and deliver better products and services to consumers. Through concrete actions, we aim to create greater positive value for our users, merchants, and the society as a whole. With that, I will turn the call over to Chen Lei, who will provide further details.

And hello, everyone. I'm Chen Lei, and thank you for joining our earnings call for the second quarter of 2026. In the first half of the year, we made tangible progress under the new decade of high-quality development strategy and laid a solid foundation for long-term growth. As Jiazhen just mentioned, we focused on 2 key areas. First, through the CNY 100 billion support program, we continue to give back to both consumers and merchants. At the same time, we upgraded our platform governance framework across the board. This initiative has helped foster a healthier environment, both on our platform and in the broader industrial ecosystem. And second, we continue to work towards our 3-year initiative of building another PDD. We stepped up supply chain investments and helped supply chain partners build and develop their own brands. During the quarter, our long-term investment in the CNY 100 billion support program started to materialize into gains in a healthier platform ecosystem. On the supply side, our merchants benefited from a combination of fee reductions, merchant support initiatives, and a stronger platform governance. These initiatives unlock greater innovation among merchants, leading to the launch of new products and new brands, which drove incremental demand and new sources of growth. Many manufacturers adopted digital and intelligent technology to enable customized production, and this drove improvements in quality and efficiency across the supply chain and enabled the manufacturers to transition towards a new development model. On the demand side, we continue to serve consumers' evolving needs for different product categories and diverse consumption occasions. This was particularly evident in the rural areas where our free shipping to villages program put a much wider selection of products within the reach of our consumers, helping improve their quality of life. Drawing on the supply chain capabilities and brand development experience gained through the CNY 100 billion support program, we took steps in this quarter to further integrate the supply chain. Our teams delve into the industrial belts of different product categories and started early-stage cooperations with high-quality suppliers. By setting clear standards for products, production processes, and quality control, we help merchants and manufacturers adapt their operations and develop a range of higher-quality products with higher margins. Through these efforts, we continue to unlock the strength and the potential within the supply chain, driving the manufacturing sectors of the value chain. Since the beginning of the year, global regulatory and compliance landscapes have undergone a significant shift. This change created challenges as well as opportunities, and they also come with greater responsibilities. We find ourselves at a unique intersection of global trade, constantly navigating diverse international regulatory frameworks. At the same time, our position is a unique one. The business touches the daily lives of billions of people around the world. While there is substantial potential for growth, it is accompanied by increased expectation and higher standards of accountability. We will stay true to our mission and continue to do every part of our work with dedication and discipline. First, we will keep strengthening our compliance capabilities and fine-tuning platform governance. To protect intellectual property, we combine screening technologies with expert review to monitor and assess product listings across all categories in real time. This enables us to address IP risks earlier in the process and has led to systematic improvement of IP protection across our platform. And second, we continue to invest resolutely in the supply chain. By smoothly executing all these structural upgrades, our ultimate goal is to build a highly resilient e-commerce platform that consumers around the world can rely on for competitive price and great quality. As we step into our next decade, we remain laser-focused on our core e-commerce business. By deepening our supply chain investments, we will continue to empower our merchants and broader industry, delivering a wider range of high-quality products and services. We are confident in our ability to translate our 3-year initiative of building another PDD into tangible, verifiable results. And in doing so, we will strive to help the transition supply chain capture the opportunity in this new intelligent era and empowering them to transform and move out the value chain and build brands with global reach. And now let me turn it over to Jun Liu, who will walk you through our results for the second quarter 2026.

Well, thank you, Lei, and hello, everyone. This is Jun Liu. Now let me walk you through our financial performance for the second quarter ended June 30, 2026. First, income statement. In the second quarter, our total revenues increased 8% year-over-year to RMB 112.4 billion. This was mainly driven by an increase in revenues from transaction services. Revenues from online marketing services and others were RMB 57.6 billion this quarter compared with RMB 55.7 billion in the same quarter of 2025. Revenues from transaction services were RMB 54.7 billion, up 13% from the same quarter last year. Moving on to costs and expenses. Our total cost of revenues increased 5% from RMB 45.9 billion in Q2 2025 to RMB 48 billion this quarter. On a GAAP basis, total operating expenses this quarter increased 13% to RMB 36.6 billion from RMB 32.3 billion in the same quarter of 2025. On a non-GAAP basis, total operating expenses increased to RMB 35.3 billion this quarter from RMB 30.4 billion in Q2 2025. Our total non-GAAP operating expenses as a percentage of total revenue this quarter was 31% versus 29% in the same quarter last year. Looking into specific expense items. Our non-GAAP sales and marketing expenses this quarter were RMB 29.3 billion, up 10% versus the same quarter last year. On a non-GAAP basis, our sales and marketing expenses as a percentage of our revenues this quarter was 26%, in line with the same quarter last year. Our non-GAAP general and administrative expenses were RMB 1.7 billion versus RMB 0.7 billion in the same quarter of 2025. Our research and development expenses were RMB 4.3 billion this quarter on a non-GAAP basis, up 40% year-over-year. On a GAAP basis, operating profit for the quarter was RMB 27.8 billion versus RMB 25.8 billion in the same quarter last year, up 8% year-over-year. Non-GAAP operating profit was RMB 29.1 billion versus RMB 27.7 billion in the same quarter last year. Non-GAAP operating profit margin was 26% this quarter versus 27% for the same quarter last year. Net income attributable to ordinary shareholders was RMB 27.2 billion for the quarter compared to RMB 30.8 billion in the same quarter last year. Basic earnings per ADS was RMB 19.32, and diluted earnings per ADS was RMB 18.45, versus basic earnings per ADS of RMB 22.01 and diluted earnings per ADS of RMB 20.75 in the same quarter of 2025. Non-GAAP net income attributable to ordinary shareholders was RMB 28.5 billion versus RMB 32.7 billion in the same quarter last year. Non-GAAP diluted earnings per ADS was RMB 19.33 versus RMB 22.07 in the same quarter of 2025. That completes the income statement. Now let me move on to cash flow. Our net cash generated from operating activities was RMB 25.7 billion compared with RMB 21.6 billion in the same quarter last year. As of June 30, 2026, we had RMB 456.4 billion in cash, cash equivalents, and short-term investments. Thank you, and this concludes my prepared remarks.

Thank you, Jun Liu. We'll now move on to the Q&A session. In today's Q&A session, Lei, Jiazhen and Jun will take questions from analysts on the line. [Operator Instructions] Lei and Jiazhen will answer questions in Chinese and we will help translate for convenience purpose. Operator, we are open for questions.

[Operator Instructions] Your first question comes from Thomas Chong with Jefferies.

[Foreign Language] I will translate myself. My first question is about the company's global business. We noticed that the EU introduced a temporary customs duty on low-value cross-border consignments starting from July this year. Can management help us understand the expected impact of this change on the company's overall order volume? In light of these policy headwinds, what will be the company's growth strategy for the global business going forward? And my second question is on the company's first-party brand business announced last quarter. Could management provide an update about the rollout and the progress made so far? And more broadly, how should investors frame the potential impact of this initiative on the company? How are you thinking about the mix and the positioning of first-party versus third-party products? And what will guide your pricing strategy for first-party products?

[Interpreted] Thomas, this is Chen Lei. Let me take your first question about our global business. Over this period, the regulatory and compliance landscape facing our global business has changed significantly. These changes have created challenges as well as opportunities for our business. They also come with great responsibilities. We believe we stand at a unique intersection in the global economy and global trade. We face pressure from different regulatory policies while also occupying a distinctive position. Currently, our business touches the daily lives of billions of people around the world. While there is substantial potential for growth, it is accompanied by increased expectations and higher standards of accountability. On the changes to the EU customs duties that you mentioned, our team is actively assessing and adapting to them. Drawing on the experience that we have gained over the years, we have adjusted our supply chain, and we are optimizing our fulfillment processes. With compliance at our bottom line, we are working to balance consumer experience, merchant operations, and the long-term development of our business. In the short term, cross-border orders in the affected markets will face lower fulfillment efficiency and higher costs, which will have a considerable impact on those parts of our business. However, over the medium to long term, changes in the external environment have further underscored the importance in our supply chain and has prompted us to accelerate the development of the relevant capabilities. First, the platform will continue to onboard and support more high-quality local merchants to broaden the supply of local products. Second, we are accelerating the build-out of local warehousing and fulfillment infrastructure and expanding the coverage of local fulfillment. Through these investments, we hope to integrate more deeply into every market we serve, strengthen the foundation and resilience of our supply chain, and better navigate changes and volatility in the environment. In addition to supply chain capabilities, compliance capabilities and platform governance are also critical foundational capabilities in which we will invest for the long term. We will continue to enhance platform governance, further improve product quality, and strengthen consumer protection with the goal of providing consumers around the world with a platform they can trust. At the same time, we have done extensive work on intellectual property compliance to provide a healthy business environment and level playing field for merchants around the world. Building on technology-enabled monitoring and manual review, the platform has developed systematic IP protection capabilities. Our recent favorable ruling in the IP litigation involving an industry peer has further demonstrated the effectiveness of our IP protection mechanism. We will remain committed to protecting the legitimate rights and interests of our ecosystem partners and to fostering a fair and reliable business environment. Regulatory and policy changes are issues that the entire industry must address. We are confident in our execution capabilities and organizational resilience. Short-term volatility will not change the long-term direction of our global business. Going forward, we will continue to steadily advance our work across supply chain, fulfillment, compliance, and consumer service. We will strive to provide consumers around the world with a shopping platform that remains stable over the long term and offers compelling prices and reliable quality, a platform that they can count on, trust, and enjoy using. Thank you.

[Interpreted] This is Zhao Jiazhen. Regarding your second question, our first-party brand business is an important extension of our long-term investment in supply chain capabilities. We aim to work closely with manufacturers that have strong capabilities and willingness to invest in long-term product development. By leveraging the platform's market insights and global reach, we seek to bring greater certainty to brand development and value creation across the industry value chain and in turn, turn out incremental value into tangible benefits for all the participants. And in terms of execution, we will first focus selectively on core product categories where our platform and supply chain capabilities provide some distinctive advantages. We will work with manufacturers over the long term from product planning and R&D to setting quality standards and marketing testing. The business requires an extended period of development and collaboration, and the initial rollout has taken longer than we originally expected. And nevertheless, it remains a clear long-term strategic priority for the platform, and we will remain patient and focused on getting every step right, and we are confident in the long-term prospects of our first-party brand model. And in terms of our operating strategy, our commitment to maintaining an open and fair marketplace will not change. We have always believed that consistently delivering quality products and services to consumers requires a healthy, fair, and diverse supply chain ecosystem. And going forward, our first-party brand products and products offered by third-party merchants will complement each other in meeting consumers' diverse needs across different use cases and market segments, and ultimately creating an ecosystem that benefits all participants. Thank you. And operator, we can move on to the next analyst on the line.

Your next question comes from Alicia Yap with Citigroup.

[Foreign Language] So 2 questions. First is that we have seen many global e-commerce companies invest in their own warehousing and also delivery capabilities as they scale, for example, by building out their own warehouse networks and also delivery capabilities. How should we think about the company investment priority in this area over the long term? And the second question is on the quick commerce. So many global peers have made significant investment in this area. How does management assess the potential impact of the shift in consumer behavior on the industry competitive landscape and also the company's core business? As the industry ramp up investment in the same-day delivery, what strategy is the company pursuing to strengthen user mindshare and also defend your market share?

[Interpreted] This is Zhao Jiazhen. As with our other investments, our investments in logistics and fulfillment are guided by the need to improve consumer experience and address the practical challenges the merchants face in doing business. We make prudent and targeted investments where we believe we can create tangible value. And accordingly, our investment priorities vary across markets and business models. In the domestic market, our e-commerce logistics network are already quite well developed across most regions; however, last-mile delivery remains a significant bottleneck in remote Western regions and many rural communities. And to address this problem, we have committed substantial resources to strengthening logistics network. And on our RMB 100 billion support program, we are firmly advancing the free shipping to villages initiative and our logistics support for remote regions. And since the end of last year, under the free shipping to villages initiative, we have established local service stations covering all 177 villages in Hunan, Youxian. In Shandong, we have increased the number of parcels delivered to villages to more than 100,000 per day. And this infrastructure not only helps agricultural supplies such as fertilizers reach farmers more directly, but also enables a wider range of high-quality products to reach rural consumers more efficiently. And in doing so, we are helping unlocking significant consumer demand in underserved regions and meaningfully improve order conversion for our merchants that serve these communities. In certain overseas markets, fragmented point-to-point shipping by individual merchants oftentimes makes it very difficult to achieve the economies of scale that is made possible through the consolidation of shipments. This results in higher overall fulfillment costs and leaves some consumer demand unmet. In markets facing these challenges, we invest targetedly in development and operations of transit warehouses. These investments help local merchants streamline their fulfillment processes and lower logistics barriers while providing local consumers with a more reliable delivery experience. And back to your question, we will continue to take a practical and solution-oriented approach to fulfillment-related investments and by building stronger supply chain capabilities and improving the efficiency and reliability of fulfillment services, we aim to enhance the consumer experience, create a virtuous cycle between supply and demand, and strengthen the platform's capacity for sustainable organic growth over the long term. And to your second question, retail and e-commerce business models are constantly evolving, and we are seeing a growing range of innovative business models emerge across the market. Quick commerce serves different consumer needs and use cases as compared to our core e-commerce and grocery businesses. And given the current stage of our business, these are fairly different in terms of both supply chain requirements and operating model and with limited scope for synergies. We have, therefore, chosen to focus our resources and efforts on areas where we have established strength and are best positioned to create differentiated value. As the industry matures, platforms will take different approaches to serving consumers based on their respective capabilities and experience. Our path has always been quite clear, which is we will continue strengthening our supply chain capabilities. Our current supply chain investments have 2 complementary priorities. First is ensuring a strong supply of quality products, and second is building the infrastructure to deliver them efficiently. And on the product supply side, through initiatives such as new quality supply and Pinduoduo Premium produce, we continue to help capable traditional manufacturers strengthen their product development and brand building capabilities, enabling them to move up the value chain and giving consumers greater access to high-quality products at compelling value. And on the infrastructure side, through projects such as free shipping to villages, we are improving our distribution network and addressing last-mile delivery gaps in remote areas and enabling consumers in more regions to benefit from the convenience and affordability of e-commerce. The supply chain investments we have chosen to make may not yield immediate results, but we believe over the long term, it will create tangible value for the industry, consumers, and our merchant ecosystem. We will remain focused on this foundational yet very important work and continue creating differentiated value for consumers and merchants. Thank you. Operator, I think we have time for one more analyst.

Your final question comes from Joyce Ju with Bank of America.

[Foreign Language] My first question is on long-term commercialization potential. It has been like almost a year since the company launched the RMB 100 billion support program. Could management provide an update on the health and activity of the merchant ecosystem following the investments? As the ecosystem improves, are you seeing or would you expect to see a corresponding increase in merchants' willingness to spend on advertising? My second question is on the revenue growth outlook. Based on the trends observed in the first half, how are you thinking about the consumer spending outlook for the full year? Looking ahead, does platform revenue have the potential to outgrow the broader consumer market?

[Interpreted] This is Zhao Jiazhen. As mentioned earlier, the CNY 100 billion support program is starting to show results from the CNY 10 billion fee reduction program introduced in 2024 to the CNY 100 billion support program early last year. The resources and the supply chain support that we have provided have reached major agricultural regions and manufacturing clusters. And we're encouraged to see that these efforts have enabled many merchants in industrial belts to make meaningful gains in both quality and efficiency. For example, with the support from the platform, a cosmetics company in Guangdong significantly reduced its customer acquisition and operating costs. This company reinvested the profits in a 2-year R&D effort, successfully transitioning into patented and national brands. And merchants in Zhongshan lighting manufacturing belt have also leveraged the platform's fast product testing capabilities to increase investment in high-quality lighting components and smart product features, which led to the launch of a best-selling product that generated several millions in sales within just a few months. And these tangible results demonstrate that our efforts to reinvest in the supply chain ecosystem are working. Of course, building a healthier merchant ecosystem takes time, and we will remain committed to these investments and help more merchants achieve healthier and more sustainable growth. And e-commerce platforms are 2-sided networks. The merchants' growth prospects are closely tied to a high-quality consumer experience and a healthy platform ecosystem. Our 100 billion support program is, therefore, focused first and foremost, on improving product quality, strengthening the supply chain, and supporting the merchant ecosystem such that small- and medium-sized merchants can reinvest their efficiency gains in product upgrades. Over the long term, lower operating costs, stronger profitability, and greater business confidence among merchants will ultimately drive sustainable organic value creation across the platform. Thank you.

This is Jun. And let me take your second question. In the first half of the year, as consumption support policies continue to take effect, China's consumer market expanded steadily and online retail penetration continued to grow. We remain confident in the long-term potential of China's consumer market and e-commerce industry. As e-commerce enters a new stage of development, platforms need to take a more proactive growth in unlocking new growth by addressing fundamental supply chain bottlenecks. Like for example, through our free shipping to villages initiative, we're investing in a more comprehensive last-mile delivery network, including transit warehouses and village pickup points. These efforts are helping strengthen rural commerce and distribution networks and stimulate consumer demand in these regions. In the first half of this year, retail sales in rural areas grew faster than the overall market, showing significant potential. On monetization, just as Zhao Jiazhen mentioned, we remain focused on strengthening the platform ecosystem and helping our merchants grow. Over time, by getting these fundamentals right, we believe the sustainable growth in the platform's intrinsic value will naturally follow. Thank you.

Okay. Thank you, Jun, and thank you all for joining us today. It's about time, and we look forward to seeing you next quarter.

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]